Electronic Customs Procedures and Brexit

Theresa May's dismissal of Boris Johnson's suggestion that technology could allow customs checks without physical infrastructure (to solve the Irish border issue) is perverse. Her claim that such systems do not yet exist is not true and one must query if Number 10 talks to anyone other than the Treasury.

The UK was a pioneer of electronic clearance systems, starting with BT's 1971 Heathrow air cargo system. With the introduction of VAT and increased cross channel traffic, BT and Customs cooperated to develop DEPS (Departmental Entry Processing System) the forerunner of CHIEF (Customs Handling of Import and Export Freight). CHIEF was introduced in three phases and completed in 1994. It is one of the largest and most advanced processing systems in the world.

UK non-EU imports are pre cleared using CHIEF and almost all goods, including part loads, are despatched from the port as they arrive.

Similar systems within the EU are not as advanced and vary from member to member. However, there are accepted procedures under the umbrella of the Import Control System (ICS). The Irish government's Office of the Revenue Commissioners states on its web site:

-The Single Administrative Document (SAD) allows goods to be placed under customs-approved treatment.

Unsurprisingly, the EU decided to introduce a common customs clearance system.

Although under consideration for some years, in October 2013, the EU adopted regulation No 952/2013. Union Customs Code (UCC) to develop an electronic customs system in response to the integration agreed by the Lisbon treaty. It is supposed to be operational by 2020.

According to the Irish revenue service, "Revenue will undertake a large body of mandatory electronic customs systems developments over the period 2016 to 2020." UCC will provide:

The mandatory use of electronic processing techniques for the exchange and storage of information between customs authorities and between customs authorities and economic operators.

The uniform application of the UCC across all Member States including the use of internationally accepted data models and message formats.

The use of non-electronic processing techniques on a transitional basis up to 31 December 2020, where electronic systems are being upgraded or developed.

In response to UCC, HMRC decided to replace CHIEF with CDS (Customs Declaration Service) a more sophisticated system.

CDS will start in August and willbe fully operational in November this year and fully introduced by early 2019.

According to HMRC:

'The decision to replace CHIEF with CDS was made before the EU referendum. However, CDS will be scaled to handle any potential increases in the volume of declarations that may result from the UK's exit from the EU.'

HMRC Chief Executive Jon Thompson has stated, 'The programme remains on track to be complete in August 2018 and transition users onto the new system by January 2019.'

Electronic customs systems exchange information internationally using the United Nations Customs Declaration Message system (CUSDEC) that permits the transfer of information between customs administrations.

The systems exist. They work in respect of non-EU trade and will work when we leave the EU if the EU wishes them to. This is the nub. It seems obvious that having appointed a team of committed federalist as negotiators, the EU's main interest is in deterring others rather than reaching agreement. It is difficult not to detect irritation that they cannot treat the UK - a rebel province in their view - with the same harshness that Spain treated Catalonia.

The reluctance of 10 Downing Street and the Treasury to acknowledge and then use the facts in order to counter the EU's misinformation can but strengthen the EU in their belief that they are not dealing with a sovereign state.

Mrs May should remember, instead of making wild accusations and threats, that it was actually the UK who pioneered electronic customs procedures. We are experts. The UK port industry is the second largest in Europe and the UK is the world's maritime centre with unequalled services expertise.

Our major ports are super-efficient. Felixstowe has some of the deepest water in Europe and can cope with the new giant container vessels, giving the lie to scares about perishables (bananas don't grow in the EU.) The Port of Tilbury's London Container Terminal is Europe's largest terminal for refrigerated containers. It has 1,400 reefer plugs and access to a 25,000-pallet space cold storage facility.

Up river, London Gateway, a new port in London, has the advantage of being located at the edge of the capital city. The port has the largest logistics park in Europe. Their ship-to-shop times are outstanding and make them a first choice for high volumes of time-sensitive and perishable goods.

Number 10 and the Treasury must be aware that the EU is struggling to implement UCC on time. Are our elected representatives then covering up the EU Commission's shortcomings, particularly when they make such a horror story over the ROI/NI border issue?This issue is perfectly solvable electronically. Our system will be ready. The Irish government claim theirs will be too, and if there is slippage in Irish-UCC implementation, there is no reason why their existing systems would not prove adequate. Alternatively, as a gesture of goodwill, we could offer to let them use our system until they are comfortable with their own.

If electronic common sense fails, we can suggest that the ROI temporarily becomes part of the UK Customs Union until they have resolved their problems. We already know that the EU is comfortable with the idea of separating territories (viz their proposal on NI) and there is a precedent: the German enclave town of Büsingen am Hochrhein is fully surrounded by Switzerland. Büsingen is included into the Swiss Customs territory and excluded from the customs territory of the EU. It is also excluded from the EU VAT and excise territory.

We do not need to make threats. Simply stating facts would be of greater value. Joined up government and a common songbook are long overdue. It is time to use the truth to advance the interests of our country.

About the author

Michael Wood dropped out of art school and worked in agriculture until accepted for business training by a major Japanese trading house. Working for major Japanese, Dutch and German firms he was involved in International trade from the mid sixties to his retirement in 2010. His career focus was mainly on agricultural products and he has extensive knowledge of perishables both short sea imports and deep sea exports. He travelled widely and has lived and worked in Nigeria, Ukraine, Central Asia as well as the EU (Belgium, Germany and Luxembourg). He became involved in information technology in the late 90s and was engaged by LM Ericsson to advise on a mobile telephone business model applicable to sparsely populated developing countries in Central Asia.

Prior to retirement he was CFO and GM of a London based manufacturing, warehousing and property company. The manufacturing division sourced raw materials and parts from Italy, UK, China, Taiwan and India.

After retirement he developed disability products with Chinese manufactures and imported them into the UK.

He now lives in London with his wife, a lawyer, and writes on a variety of subjects including disability issues.

Comments
1

Would I be right in saying that this would be known as "Max Fac"? It certainly seems like it. A great informative article. Thank you. It's added another string to my bow
Cheers John W Young London 30-07-2018

Would I be right in saying that this would be known as "Max Fac"? It certainly seems like it. A great informative article. Thank you. It's added another string to my bow
Cheers John W Young London 30-07-2018